Page 40 - 2020 Publication 17

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
“DIED” in column (2) of the Dependents section tax for 2021 or 110% of the tax shown on your 14:38 - 19-Jan-2021
of your Form 1040 or 1040-SR. 2020 return to avoid an estimated tax penalty. Tax Withholding
Alien or adoptee with no SSN. If your de- for 2021
you must list the individual taxpayer identifica- Introduction This section discusses income tax withholding
pendent doesn't have and can’t get an SSN,
tion number (ITIN) or adoption taxpayer identifi- This chapter discusses how to pay your tax as on:
cation number (ATIN) instead of an SSN. you earn or receive income during the year. In • Salaries and wages,
Taxpayer identification numbers for ali- general, the federal income tax is a
ens. If your dependent is a resident or nonresi- pay-as-you-go tax. There are two ways to pay • Tips,
dent alien who doesn't have and isn't eligible to as you go. • Taxable fringe benefits,
get an SSN, your dependent must apply for an • Withholding. If you are an employee, your • Sick pay,
individual taxpayer identification number (ITIN). employer probably withholds income tax
For details on how to apply, see Form W-7, Ap- from your pay. Tax may also be withheld • Pensions and annuities,
plication for IRS Individual Taxpayer Identifica- from certain other income, such as pen- • Gambling winnings,
tion Number. sions, bonuses, commissions, and gam- • Unemployment compensation, and
Taxpayer identification numbers for bling winnings. The amount withheld is
adoptees. If you have a child who was placed paid to the IRS in your name. • Certain federal payments.
with you by an authorized placement agency, • Estimated tax. If you don't pay your tax This section explains the rules for withholding
you may be able to claim the child as a depend- through withholding, or don't pay enough tax from each of these types of income.
ent. However, if you can’t get an SSN or an ITIN tax that way, you may have to pay estima-
for the child, you must get an adoption taxpayer ted tax. People who are in business for This section also covers backup withholding
identification number (ATIN) for the child from themselves will generally have to pay their on interest, dividends, and other payments.
the IRS. See Form W-7A, Application for Tax- tax this way. Also, you may have to pay es-
payer Identification Number for Pending U.S. timated tax if you receive income such as Salaries and Wages
Adoptions, for details. dividends, interest, capital gains, rent, and
royalties. Estimated tax is used to pay not Income tax is withheld from the pay of most em-
only income tax, but self-employment tax ployees. Your pay includes your regular pay,
and alternative minimum tax as well. bonuses, commissions, and vacation allowan-
This chapter explains these methods. In ad- ces. It also includes reimbursements and other
dition, it also explains the following. expense allowances paid under a nonaccounta-
4. • Credit for withholding and estimated ble plan. See Supplemental Wages, later, for
tax. When you file your 2020 income tax more information about reimbursements and al-
lowances paid under a nonaccountable plan.
return, take credit for all the income tax If your income is low enough that you won't
Tax Withholding withheld from your salary, wages, pen- have to pay income tax for the year, you may be
sions, etc., and for the estimated tax you
exempt from withholding. This is explained un-
and Estimated paid for 2020. Also take credit for any ex- der Exemption From Withholding, later.
cess social security or railroad retirement
You can ask your employer to withhold in-
tax withheld. See Pub. 505. come tax from noncash wages and other wages
Tax • Underpayment penalty. If you didn't pay not subject to withholding. If your employer
enough tax during the year, either through
withholding or by making estimated tax doesn't agree to withhold tax, or if not enough is
withheld, you may have to pay estimated tax, as
payments, you may have to pay a penalty. discussed later under Estimated Tax for 2021.
What's New for 2020 In most cases, the IRS can figure this pen-
alty for you. See Underpayment Penalty for Military retirees. Military retirement pay is
2020 at the end of this chapter. treated in the same manner as regular pay for
Extended due dates for estimated tax pay- income tax withholding purposes, even though
ments. The due date for filing estimated tax it is treated as a pension or annuity for other tax
forms and paying estimated taxes has been Useful Items purposes.
postponed to July 15, 2020. You may want to see: Household workers. If you are a household
What's New for 2021 Publication worker, you can ask your employer to withhold
income tax from your pay. A household worker
505 505 Tax Withholding and Estimated Tax is an employee who performs household work
Tax law changes for 2021. When you figure in a private home, local college club, or local
fraternity or sorority chapter.
how much income tax you want withheld from Form (and Instructions) Tax is withheld only if you want it withheld
your pay and when you figure your estimated W-4 W-4 Employee's Withholding Certificate and your employer agrees to withhold it. If you
tax, consider tax law changes effective in 2021. don't have enough income tax withheld, you
For more information, see Pub. 505, Tax With- W-4P W-4P Withholding Certificate for may have to pay estimated tax, as discussed
holding and Estimated Tax. Retirement or Annuity Payments later under Estimated Tax for 2021.

Reminders W-4S Withholding From Sick Pay Farmworkers. Generally, income tax is with-
W-4S Request for Federal Income Tax
held from your cash wages for work on a farm
unless your employer does both of these:
Estimated tax safe harbor for higher in- W-4V W-4V Voluntary Withholding Request • Pays you cash wages of less than $150
come taxpayers. If your 2020 adjusted gross during the year, and
income was more than $150,000 ($75,000 if 1040-ES 1040-ES Estimated Tax for Individuals
you are married filing a separate return), you 2210 2210 Underpayment of Estimated Tax by • Has expenditures for agricultural labor to-
must pay the smaller of 90% of your expected Individuals, Estates, and Trusts taling less than $2,500 during the year.
Differential wage payments. When employ-
2210-F 2210-F Underpayment of Estimated Tax ees are on leave from employment for military
by Farmers and Fishermen duty, some employers make up the difference
Page 36 Chapter 4 Tax Withholding and Estimated Tax